A new book, Priceless: The Myth of Fair Value (and How to Take Advantage of It), claims to explain why stores and restaurants use prices like $9.95. It tricks you into thinking that you are getting a better deal.
It seems likely that he is correct, but there are currently several big food advertising campaigns with round number pricing. Pizza Hut is selling pizza for $10, Subway is selling foot-long sandwiches for $5, Burger King is selling cheeseburgers for $1, and Boston Market is pushing sides for $1. No 99 cents. These campaigns seem to be extremely successful.